It's been a good week for Copart, Inc. (NASDAQ:CPRT) shareholders, because the company has just released its latest quarterly results, and the shares gained 3.8% to US$89.26. It looks like a credible result overall - although revenues of US$554m were what analysts expected, Copart surprised by delivering a profit of US$0.91 per share, an impressive 54% above what analysts had forecast. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent forecasts to see whether analysts have changed their earnings models, following these results.
Following the latest results, Copart's eleven analysts are now forecasting revenues of US$2.36b in 2020. This would be a notable 11% improvement in sales compared to the last 12 months. Earnings per share are expected to reduce 2.1% to US$2.96 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$2.32b and earnings per share (EPS) of US$2.65 in 2020. Although the revenue estimates have not really changed, we can see there's been a substantial gain in earnings per share expectations, suggesting that analysts have become more bullish after the latest result.
Analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 8.6% to US$94.50. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Copart at US$102 per share, while the most bearish prices it at US$79.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. It's pretty clear that analysts expect Copart's revenue growth will slow down substantially, with revenues next year expected to grow 11%, compared to a historical growth rate of 14% over the past five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.7% next year. So it's pretty clear that, while Copart's revenue growth is expected to slow, it's still expected to grow faster than the market itself.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Copart following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Copart's revenues are expected to grow faster than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Copart analysts - going out to 2022, and you can see them free on our platform here.
You can also view our analysis of Copart's balance sheet, and whether we think Copart is carrying too much debt, for free on our platform here.
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